You should be able to copy files from this location to /media/internal or elsewhere to maintain a backup should you decide to either do a Hard Reset of Classic, or a Hard Reset of the Pre. When either backing up or restoring in this directory, you must close Classic first. Failure to do so could yield unexpected results.

A directory listing of of a clean (just after reset) /var/lib/palmos/datamgr/PALM_DM:

The file suffix is a binary bitmap showing which letters in the file name are capitals, a technique formerly used (created?) by NVBackup[1], a powerful backup utility for NVFS-based PalmOS devices like the Centro, Treo 600+, Palm T5, TX, TE2 and LifeDrive created by pruss[2] (see his explanation in 1SRC forum[3]).